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Tekijä: | Inderst, R. Mueller, H.M. |
Otsikko: | Early-stage financing and firm growth in new industries |
Lehti: | Journal of Financial Economics
2009 : AUG, VOL. 93:2, p. 276-291 |
Asiasana: | financing investments venture capital products markets competition company growth new economy industries models |
Kieli: | eng |
Tiivistelmä: | It is shown that active investors (henceforth as: a-invs.), e.g. venture capitalists, can affect new ventures' (here as: n-vns.) growth speed. In the absence of product market competition, n-vns. financed by a-invs. grow faster initially. Yet, in the long run those financed by passive investors (as: p-invs.) can catch up. By contrast, in a competitive product market, n-vns. financed by a-invs. may prey on competitors financed by p-invs. by "strategically overinvesting" early on, resulting in long-run differences in investment, firm growth, and profits. The value of a-invs. is greater in highly competitive industries (as: inds.) and in inds. with economies of scope, learning curves, and network effects, being typical for many "new economy" inds. For such inds., this paper's model predicts that start-ups with access to venture capital may in the long run dominate their industry peers. |
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